AT&T eyes lower subsidies, shared data plans

May 17, 2012|Reuters

(BRENDAN MCDERMID, REUTERS)

NEW YORK (Reuters) - AT&T Inc is hoping to help its margins by lowering smartphone subsidies and the company also aims to boost revenue with a new offering that would allow consumers to share their data allowance between tablets and smartphones.

Now that growth is slowing for U.S. contract customer operators, including No. 2 U.S. mobile operator AT&T and its rivals Verizon Wireless and Sprint Nextel Corp are looking for new avenues for expansion, while they try to control costs. Verizon Wireless is a venture of Verizon Communications and Vodafone Group Plc

AT&T has already said it would keep 2012 smartphone sales limited to 2011 levels to cut down on upgrade costs. Like its rivals, AT&T shoulders some of the cost of smartphones to offer discounts to customers who sign on for two years.

Ralph de la Vega, the head of the company's mobile business, also suggested he would push to reduce subsidies for the phones it does sell. He declined to give a specific estimate for subsidy levels.

"But you can take it to the bank that our thrust is to lower that in every case that we can," he said during a webcast of an investor meeting on Thursday.

AT&T customers currently have to sign on for separate data plans for every wireless device they want to connect to its network. But this could change, according to de la Vega, who discussed linking wireless data plans between tablet computers and smartphones.

"What we need to be able to do is to allow customers to connect those tablets to some of the existing data plans that they have to be able to share them in a way that will drive more revenue for us, but also give a good deal to customers," he said.

AT&T's comment follows rival Verizon Wireless, which has already said it plans to unveil shared data plans this summer.

Analysts have long said operators would need to change their data pricing structure to encourage consumers to connect their tablets to cellular networks. Most tablet users make do with Wi-Fi connections because they want to avoid signing up for a second data plan.

(Reporting by Sinead Carew in New York and Jim Finkle in Boston; editing by Andre Grenon)